Outcome of Constitutional Court case crucial to property development
Wednesday, 25th April 2012

The background to this case is that a property developer bought a rundown, old fashioned block of apartments in Braamfontein, Johannesburg, an area which is much in demand by tenants, especially students, on account of its strategic position.

The developer then made known to the tenants his plan to renovate and upgrade the units - as a result of which, he said, rents would have to be raised 100 to 150%.

This was shattering to the tenants concerned because they had been paying very low rents, some of which were said to be under R1 200 per month. Furthermore, some of the tenants had lived there for over ten years.

The tenants appealed in court against this decision claiming that such huge rent increases were oppressive and unfair and contrary to the Rental Housing Act.

The case ended up at the Supreme Court of Appeal, which ruled in favour of the landlord who, it said, was entitled to a fair profit from his investment (he had claimed he was actually losing money on it) and he had no tenants on long leases all such long leases had expired and all his tenants were, therefore, leasing on a one month notice basis.

The tenants then took their case to the Constitutional Court arguing that they had a constitutional right to housing and that evictions were not acceptable unless similar quality accommodation at the same price in the same area was available.

The Constitutional Court then ruled that the Supreme Court judgement should be set aside and the eviction notices given to tenants should have been stayed.

This court also however recommended that the tenants should approach the Rental Housing Tribunal for a decision on whether the landlord action had been fair or unfair in terms of the Rental Housing Act and the court supported the landlord's right to appeal to the Tribunal as to whether increasing the rents was fair or unfair.

In addition, the Constitutional Court issued an order allowing any of the parties to lodge a complaint in terms of the Rental Housing Act (by 2nd May). If such a complaint is lodged the parties are granted permission to apply to the Gauteng Rental Tribunal for a ruling. The court said that if this was not done within two weeks the tenants' case would be dismissed.

Source: IOL (amended by PropX)

According to Willem Tait, PropX CEO:
Over the past 10 years we have secured a couple of conversion properties for our clients and PropX has always suggested that an offer to purchase reflects that the property must be vacant on occupation/transfer, leaving the seller with the responsibility to vacate tenants before transfer, thus avoiding the above mentioned problem.

Clients and property professionals are welcome to stay in contact with me for more selective, intellectual capital tips and suggestions on how to avoid the above scenario.

Contact Willem on willem@propx.co.za

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